Capital Trust to start Microfinance business

The share price of the firm, which seems to have reacted positively to the news, was up by around 5% to Rs 38.35.

Capital Trust Ltd, a Delhi-based financial services firm, is foraying into the country's booming microfinance sector. The board of the Bombay Stock Exchange listed non-banking finance company (NBFC) has altered a clause so that Capital Trust can undertake the business of microfinance. The company is now seeking the shareholders approval for the same. The board of Capital Trust is also planning to lift the maximum limit of its borrowing up to Rs 200 crore for expansion of microfinance business.

The share price of the firm seems to have reacted positively to the news as it was up by around 5% to Rs 38.35. The markets were down marginally today with BSE at 16,276.93 at the time of filing this post.

Capital Trust has also mandated New York-based investment bank Cedar Street Capital Partners to raise $25 million or more of capital and debt for expansion of its microfinance business.

According to its website, Capital Trust has already started microfinance operations and has 15,000 clients through its 23 branches spread over Delhi, Uttar Pradesh and Haryana. The company also plans to spread operations in Rajasthan, Madhya Pradesh and Chattisgarh.

These are relatively under penetrated areas in the microfinance sector.

The company currently focuses mainly on microfinance. Capital Trust earlier had a joint venture with Kinetic Engineering to finance all “Kinetic Honda” products in Northern India in the early 90's. It sold its stake in that venture to Kinetic in 1998 and later also started a JV with Development Bank of Singapore for stock broking.

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